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Business in St. Petersburg, Page 2

4.3.2 Joint Stock Company(JSC)

Both open and closed JSCs are legal entities which act on the basis of the articles of association adopted by its partners. Both have unlimited duration unless otherwise stipulated by the charter. Shareholders of an open joint-stock company are not liable for the company's debts beyond their contribution.

The highest governing body of both types of entities is the general shareholders meeting. The general shareholders meeting takes decisions regarding making changes to the charter and charter capital, the approval of the annual report as well as reorganisation or liquidation.

Either the Board of Directors, if so authorised by the Charter, or the shareholders appoint a general director who shall have the right to act on the company's behalf without a power of attorney The Board of Directors must also approve the general director's decision on staffing the Directorate.

The number of directors is determined by the Charter or by the General Shareholders Meeting. In an open JSC with more than 1000 shareholders, there must be at least seven members on the Board of Directors, and nine if the company has more than 10,000 shareholders.

The minimum charter capital of a closed JSC is 100 minimum monthly wages and 1000 minimum monthly wages for an open JSC.

The main difference between an open and closed JSC is the procedure for transferring shares by current shareholders. A shareholder in a closed JSC may only sell its shares with the prior consent of the other shareholders. There is no such restriction for shareholders in an open joint stock company who, therefore, may cede their shares to other persons without the consent of other shareholders.

There are other differences between open and closed JSCs regarding shareholders' rights.

A JSC may not consist of a single shareholder which is a one-person business entity.

In general, a JSC is currently the most popular legal form of legal entity which carries out business activities in the Russian Federation. A JSC may be either fully owned by a single individual or legal entity or owned by a group of shareholders.

The main differences between a JSC and an LLC:

  • Each ordinary share of a JSC gives its owner the same set of rights. On the contrary, an LLC's constituent documents may stipulate that owners of equal shares in the charter capital have different rights.
  • A JSC shareholder may leave the company by alienating his shares to other parties. In doing so, settlements for the shares are made between a shareholder and the other party An LLC shareholder who wishes to leave the company transfers his share to the LLC and receives a proportionate part of the LLC's property or its monetary equivalent in accordance with the procedure stipulated by the constituent documents.

4.3.3 Partnership

Partnerships arc legal entities established for the purpose of generating profit. Pursuant to item 2 of article 66 of the Civil Code of the Russian Federation, partnerships may be established in the form of a general partnership or a limited partnership. General Partnership

The following are some of the characteristics of a general partnership:

  • Partners in a genera] partnership are engaged in entrepreneurial activities of the general partnership and shall be personally liable for the partnership's obligations with their property
  • A general partner may not participate in more than one general partnership.
  • Unless otherwise provided for by the constituent documents, activities of a general partnership shall be managed and approved by all partners; each partner shall have the right to represent the general partnership, and each partner shall have one vote.
  • Partners are not allowed to enter personally into deals which are similar in nature to the activity performed by the general partnership without the consent of the other partners.
  • Profits and losses of a general partnership shall be distributed among the partners in proportion to their share of the pooled capital, unless otherwise stipulated by the constituent agreement.
  • A partner may not sell his share in a general partnership to another partner or to a third party without the consent of the other current partners. Limited Partnership

The following are some of the characteristics of a limited partnership:

  • A limited partnership includes general partners who are engaged in entrepreneurial activities on behalf of the partnership and limited partners who do not take part in the entrepreneurial activities of the partnership,
  • General partners are liable for the obligations of the limited partnership with their property. The limited partners are liable only in proportion to their investment.
  • A person may be a general partner in only one limited partnership. In addition, a partner in a general partnership may not be a general partner in a limited partnership.
  • Management of a limited partnership's activities shall be conducted by the general partners in accordance with the constituent documents. Limited partners are not entitled to manage the activities of the limited partnership, nor are they entitled to dispute the actions of the general partners.
  • Limited partners shall be entitled to profits in accordance with the constituent documents. A limited partner may also sell its share to other partners or to third parties. Limited partners have a priority right to purchase shares from other limited partners in the limited partnership.

4.4 Registration Procedures and Authorities

4.4.1 Representative Offices and Branches of Foreign Legal Entities

Representative offices and branches of foreign legal entities are officially recognised by a process called «accreditation».

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